Huge sell order pushes gold to 6-week low

Gold has tumbled to its lowest price in nearly six weeks as a large sell order hit sentiment, though losses were limited by political uncertainty around the world.

Spot gold was down 0.9 per cent at $US1,244.82 an ounce by 2.22 pm Monday EDT (0422 Tuesday AEST), having dropped as far as $US1,236.46, its lowest since May 17 and just above the 200-day moving average.

US gold futures for August delivery settled down 0.8 per cent at $US1,246.40, after making an $US18 drop in heavy volume to $US1,236.50 and then rebounding by $US10, all within 60 seconds around 4 am EDT (1800 Monday AEST).

The sale of 18,500 lots of gold, totalling 1.85 million ounces, and 5,000 ounces of silver in 5,500 lots on COMEX in a short space of time was behind falling prices, said Afshin Nabavi, head of trading at MKS in Switzerland.

"Clearly, somebody sold it by mistake and bought it back quickly, triggering stops below $US1,250," said MKS trader Bernard Sin.

UBS trader Joni Teves said the sudden drop in price was amplified by a lack of liquidity as some Asian markets were closed for a holiday while London was just opening.

"Somebody's made a mistake there. Stops get hit as we go lower and the algorithmic programs that jump on the back of momentum moves exacerbate the move," said David Govett, manager of precious metals and foreign exchange for Marex Spectron.

"If it was a human error, they bought it back slowly over the day."

Looking more broadly, traders said gold was supported by geopolitical uncertainty related a bailout of Italian banks, the policies of US President Donald Trump and Britain's negotiations to quit the European Union.

"The world is in geopolitical chaos and gold is still good insurance," said MKS's Sin.

Allegations of ties to Russia have cast a shadow over Trump's first five months in office while the British government's looming Brexit talks are also fuelling concern about global stability.